Global Economic Reset

“Address the issue before another financial crisis is to occur as it will most likely have global implications.”

MarketWatch | Robert Schroeder

The Director of National Intelligence Dan Coats at the Senate Intelligence Committee hearing today discussed worldwide security threats and said that the U.S. National debt is unsustainable and undermines our national security.

The failure to address our long-term fiscal situation has increased the national debt to over $20 trillion and growing. This situation is unsustainable, as I think we all know, and represents a dire threat to our economic and national security.

Coats went to encourage Congress to address the issue before another financial crisis is to occur as it will most likely have global implications.

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The investment world is realizing that cryptos are not a replacement for a sound money strategy of holding precious metal.

ZeroHedge | Sprott Money News

If you’ve held physical gold for the past five years, you’ve likely been frustrated by its lack of price appreciation. Of course, physical gold always retains its value as sound money and wealth “insurance,” but while prices of paper assets have flourished since 2013, the dollar price of gold has languished. That, it seems, is about to change.

At long last, gold, silver and all commodities appear poised for a price breakout in 2018 (and beyond) as the lower dollar, price inflation and higher interest rates that so many expected in 2010-2011 finally come to pass. In addition to those factors, several gold-specific positives have recently appeared, and they demand your consideration:

Global gold demand is strong, with the only restraining component being western investment demand. Since western investors are typically trend followers, you’d expect low investment demand to appear at price lows. This is exactly what the recent Gold Demand Trends report from the World Gold Council showed when it was published earlier this month: https://www.gold.org/research/gold-demand-trends/g&#8230;

“In a world where all things were priced in bitcoin, this would likely translate into massive swings in inflation and economic activity,”

Luxembourg-based Bitstamp exchange

As we enter the 2000 redux phase of stock market bubble and eventual collapse, let’s take a step back and recognize just how similar the landscape has become to what it was like just prior to the crash that cratered the Nasdaq over 80%.

Booming stock market that melts up on news that is good, bad, or indifferent

Unemployment near historic lows

Real estate close to reaching subprime-era highs

Biggest tax cut since George Bush Sr.

ICOs and cryptocurrencies exactly mimicking the late ‘90s madness of Internet stock IPOs

But there is another thing eerily similar to the bubbles of the recent and more distant past, which most people like to ignore: The Fed has initiated a tightening cycle for over two years now.

“If and when the bubble does pop, however, the deleveraging by lenders could create a credit crunch the likes of which haven’t been seen since the Great Recession.

DailyReaconing | Nomi Prins

It is easy to forget this laughable but incontrovertibly true statement: The Fed, if it is doing its job by the letter of the law, is supposed to supervise and regulate Wall Street.

That it actually functions as a stock market cheerleader and manipulator is such common knowledge that it is difficult to picture The Fed doing anything but using every last trick in its playbook to inflate and then sustain risk-asset bubbles.

Yet time and time again, we see that this is not a sustainable strategy. It always ends the same way. Inflate, inflate, inflate, implode. Jerome Powell has done nothing in his time at the Fed except echo his predecessors’ sentiments about policy and intimate there should be even less regulation for Wall Street. But it’s all just a matter of time:

This debt creation can’t sustain itself forever. It doesn’t take but a tiny mistake by central bankers to throw the bond markets into disarray.

Equity markets don’t always follow right away, but they will eventually follow. And these past few days, equities marched in lockstep with the spike in bond yields.

“If and when the bubble does pop, however, the deleveraging by lenders could create a credit crunch the likes of which haven’t been seen since the Great Recession.

That marks reversal from last year, when the surging prices for cryptocurrencies spurred greater appetite for initial coin offerings. More than $4 billion was raised last year in public sales of bitcoin-like tokens. ICO projects raised $911 million in January, down from a record monthly figure of $1.6 billion in December.

“Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”

BloombergTechnology | Kana Nishizawa

The tumble in cryptocurrencies that erased nearly $500 billion of market value over the past month could get a lot worse, according to Goldman Sachs Group Inc.’s global head of investment research.

Most digital currencies are unlikely to survive in their current form, and investors should prepare for coins to lose all their value as they’re replaced by a small set of future competitors, Goldman’s Steve Strongin said in a report dated Feb. 5. While he didn’t posit a timeframe for losses in existing coins, he said recent price swings indicated a bubble and that the tendency for different tokens to move in lockstep wasn’t rational for a “few-winners-take-most” market.

“The high correlation between the different cryptocurrencies worries me,” Strongin said. “Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”